LAHORE: The Federal Board of Revenue (FBR) is taking steps to bring the customs valuation office to Lahore. A single portal is being made for Federal and Provincial Taxes for harmonization of Taxes, adding the refunds of Hafeez Centre affecters will be processed on top priority.
These views were expressed by the Member Inland Revenue-Operations FBR Dr. Muhammad Ashfaq Ahmed in a meeting held here at the Lahore Chamber of Commerce and Industry on Saturday.
President LCCI Mian Tariq Misbah, Senior Vice President Nasir Hameed Khan and Vice President Tahir Manzoor Chaudhry, former Presidents Sohail Lashari and Irfan Iqbal Sheikh, former SVP Ali Hussam Asghar and VP Kashif Anwar, executive committee Members Chief Commissioner Ahmad Shuja and other senior FBR officers were also present in the meeting.
Ashfaq Ahmed said the refunds of unprecedented amounts are being paid as FBR now believes in pumping liquidity into businesses, adding, Previously when the FBR was holding refunds, the private sector was going to Banks for Working Capital and this increased their cost of business.
He said through the new Refunds system, the Refunds are being paid within 72 hours. The whole system is transparent and fully automated. Businesses have to improve technologically to align with the new system of FBR. Income Tax Refunds has many complexities and require multiple verifications. This system will be improved in coming months, he added.
He further said once the taxation system is running smoothly, the sales tax rate will come down. The issues of POS system are being resolved in consultation with the business community. The issue of misuse of tax incentives of FATA/PATA is a governance issue and measures are being taken by the Government in this regard.
President LCCI Mian Tariq Misbah said the Government has recently introduced the fully Automated Sales Tax e-Refund system (Faster Plus) for swift and transparent issuance of refunds to exporters. Government should ensure successful implementation of this system in letter and spirit on a permanent basis to avoid any liquidity crisis.
He said in addition to sales tax, the income tax fefunds should also be paid on urgent basis through the Faster Plus system, adding that the rate of 17% tax on the inputs of various export oriented industries is extremely high and should be brought down. Sales Tax should not be taken at the import stage. It should be applied after the actual sale of the respective products as in many cases 10% to 20% products get wasted/damaged/discarded while loading & offloading or transporting from warehouse to sale points etc, he added.
He further said the FBR has recently issued SRO 889 regarding the installation of surveillance cameras at factory premises to monitor production of goods in various sectors, adding it will not serve the purpose of enhancing Tax Revenues and will create an environment of undue harassment. Hence the implementation of this SRO be deferred and a better mechanism be put in place in consultation with the stakeholders.
Mian Tariq Misbah said all Raw Materials not manufactured locally must attract zero customs duties. Government must eliminate Regulatory Duties and 2 percent additional customs duty on raw materials to increase the competitiveness of local industry, adding that Molded Glass Vials and Wire-Rods are not manufactured locally but Regulatory Duty is being charged on them that should be removed.
He added that custom duties on intermediary products should be reduced so that our industry is able to import quality materials, components and machinery. Extending the facilities of Five Zero Rated Sectors to Pharmaceuticals and other Export Oriented Sectors: The incentives which are currently provided to the five zero rated sectors should also be provided other export sectors of the economy e.g. Pharmaceuticals, Rice, Halal Meat, Engineering etc. The Refunds of these sectors should also be processed through the new Faster Plus system, he added.
President LCCI said the proposed sectors should also be exempted from sales tax. Clean Room Panels are imported for use in the pharmaceuticals sector and should be exempted from Sales Tax. Deferring of fines on non-implementation of Point-of-Sales System: FBR has started imposing heavy fines on retailers/Chain stores on non-implementation of POS system. The Government must take the private sector in confidence before taking such punitive measures and address their apprehensions.
He said that FBR has granted 17% sales tax exemption and 2% withholding tax exemption to foam manufacturers based in Federal/Provincial Administered Tribal Areas (FATA/PATA) on imports of certain raw materials. These materials are imported and sold in other parts of country at cheaper rates. It is seriously hurting the regular foam manufacturers in other parts of the country. This matter requires immediate attention.
Senior Vice President LCCI Nasir Hameed Khan said High Tax on Local LPG: Local LPG production meets 60-70% demand but still the taxes on local LPG (Sales tax and Petroleum Development Levy) are higher as compared to imported LPG. This anomaly needs to be rectified.
He further said that in the post-covid economic scenario when the taxpayers are facing severe liquidity issues, the number of Audits should be decreased considerably. The FBR should follow the policy of risk-based audits. Steps to Control Smuggling: The duties on the finished goods should be minimized in order to curtail smuggling. Furthermore, the Government should also take steps to discourage the movement of illegal carriers in order to control smuggling.